"There is no fibre glut"


No surprise for a fibre maker to say that the rumour of a "fibre glut" is inaccurate, or even totally wrong. But, at the OFC event, Janice Haber of OFS had some trenchant arguments to counter the glut-believers.

The notion of glut is damaging when one is in the business of selling fibre. For years we have been trying to understand traffic volumes and where they are going, so we have a long-term view that we think is more significant than the recessionary rumours going on around us," said Haber, VP systems engineering and marketing development, to LWE.

Haber believes there are five key questions: bandwidth demand; active capacity utilisation; spare line card and slot capacity; dark fibre; and fibre shipment growth. She further believes that answers to these questions indicate that, far from under utilising the fibre already deployed, the communications industry needs to start thinking about laying down some new fibre (and preferably OFS's!).

Haber is confident that the underlying drivers - growth in bandwidth demand and computer processing power - have continued to be stable over decades. Key indicators still double every 15 months: volume of magnetic data storage; CPU transistor density; and the computer RAM/cost ratio.

"Networks are switching from voice to data; Internet traffic seems to at least double every year. Now more than 80% of the Internet traffic is business; corporate traffic and Internet bandwidth growth will continue at 147% per year," she adds.

Haber believes that there's another common misconception among industry-watchers that has directly affected investment and spending patterns, particularly during the downturn: "There's a big difference between peak and average traffic utilisation, but we need to consider peak utilisation - when jams can occur. In March 2002, KPN Qwest said it was running at 80% capacity long haul and 70% capacity on local networks. Telechoice has said that 17 of the 22 major long-haul routes in the USA exceed 60% active capacity utilisation."

Haber further believes that the figures which are supposed to reflect spare capacity overlook the fact that a lot of it is "stranded" fibre - fibre and associated equipment that was put in to support 2.5Gbit/s transmissions but which has been left behind with the arrival of faster and cheaper-to-use 10Gbit/s systems. "RHK recently produced data to show that 64% of 10Gbit/s slots may be filled but 50-70% of 2.5Gbit/s slots are empty. Perhaps USD2.2bn of vendor line card inventory has had to be written off," she said. People wouldn't continue to use the slower system because there is a 40% cost benefit to move to the higher speeds.

Carriers also don't want to reconnect old fibre to new 10Gbit/s equipment because then they have to take the customers off-line - so they just build in extra cards and fibre in parallel.

And what will happen if there isn't more investment in new fibre?

"The problem of not investing is that busy signals will appear more often and people will have to turn away business," Haber predicts.

Under present circumstances, the capital markets may need some more convincing but, if customers start to shift their business to the reliable lines, the carriers will surely give the financial bodies a call - if they can get through...

Matthew Peach
Editor in Chief,
Lightwave Europe
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